Expected Apple iPhone sales

Apple shares reached a record high yesterday crossing $700 for the first time ever. The scariest thing about this company is on an earnings basis it doesn't even look expensive. The company has just grown so fast and made so much money that earnings have always justified the rise in share price. We started buying the stock for clients "at all time highs" in April 2010 at around $250 a share. I'm telling you this to emphasise that you should not avoid a stock because it is trading at all time highs.


The reason for the recent surge has to be the news that the iPhone 5 has already sold 2 million units in 24 hrs. That is 23.15 phones per second, 1389 per minute and 83 333 per hour. This is double the take up speed of the iPhone 4S and lines Apple up with their target of selling 10 million in the first week. And people still get surprised that Apple products exceed expectations when they launch. To be honest I wanted one before I even saw it. There were so many rumours and supposed leaks that Apple didn't even need to market the launch.

A recent survey showed that 1/3 of US citizens want an iPhone. This included 56% of Blackberry users and 32% of Android users who want to switch. As big shareholders of Apple we are very happy with this launch. The iPhone remains its biggest profit driver so this was vital. Analysts expects 26 million phones to be sold this quarter and 58 million sold by the end of the year.

For 2013 these projections look even more impressive. Expectations of 165 million phones bringing in $186bn in revenues and earnings per share of $53 are what analysts have come up with. This means that if you exclude all of Apple's other businesses which includes iPads, Macs, iPods, iTunes and the app store and just look at the iPhone business you get a 2013 forward earnings multiple of 13. Conviction buy.

On another note iPhone's use much more data than any other phone. Not in a bad way. It is because their phones are more efficient. This creates opportunities elsewhere especially for the companies who provide the data. The likes of MTN and Vodacom should benefit handsomely from higher data consumption. Yes they operate in Africa where iPhone penetration is low but by raising the standards all smartphones are going to head that way. Take a look at this article titled The Mobile Browser Dominates in Emerging Markets and you will see why we are still happy accumulators of MTN and Vodacom.